The ‘missing middle’- A scramble for affordable housing

If Fairfax County developer C. Daniel Clemente has his way, more middle-class and hourly workers in the county’s fast-growing downtown Tysons area will one day have the option of walking to work instead of spending hours battling Beltway commuter traffic.
If you’re a secretary, you can’t [afford to] live at Tysons. If you’re a waiter, you can’t [afford to] live at Tysons,. Mr. Clemente wants to build a 1,400-unit multifamily apartment building at Tysons, near the Spring Hill Metro Station, where all units would be affordably priced for workforce housing in exchange for the county waiving proffer fees of about $35 million on the development.
Currently, Fairfax County requires that 20 percent of units in new multifamily housing be dedicated to affordable housing. Nonetheless, in a desirable area like Tysons — where rents can easily exceed $3,000 per month for a two-bedroom apartment — there are no incentives for developers to create much-needed affordable housing.
If the county approves his unorthodox proposal, Clemente hopes the building, to be called Evolution, would be open to tenants within five years.
As more and more millennials (and, to a lesser extent, baby boomers) move to downtown areas in search of walkable, cosmopolitan environments, corporations are following them in search of young educated workers. This phenomenon has created a scramble for affordable, workforce-priced housing in cities across America.
While developers are trying to meet the burgeoning demand for affordable rental housing, Ware says, it takes time to obtain permits, financing and tax credits.
Not keeping pace
A majority of millennials, who now outnumber baby boomers, want to live in walkable, urban environments, but developers aren’t building affordable housing fast enough to keep pace with demand. The phrase is coined as “the missing middle.” It describes the type of workforce-priced housing that has been largely absent from cities for the past several decades. Such housing is particularly sought by older millennials who may be starting families and who may be forced to consider a move to the suburbs or to less-expensive cities if they can’t find available housing stock at an affordable price.
American planning and zoning policies since the 1950s have been successful at enabling the development of single-family housing projects and high-density multifamily apartment buildings. Yet, they haven’t prioritized the construction of “missing middle” options such as duplexes, triplexes, courtyard apartments, town houses and live/work/play communities.
Faced with increased demand for affordable housing, cities and developers now must meet this need with creative options, including a mix of for-sale and rental properties in the same developments. Other options may include governments relaxing off-street parking requirements in recognition that millennials are less likely to own as many cars as previous generations. Additionally, developers may consider “communal” housing designs aimed at millennial roommates. These arrangements would offer individual bedrooms and bathrooms but shared common areas.
Seniors aren’t selling
Another problem contributing to the lack of available workforce-priced housing is that some senior citizens aren’t selling their homes. That’s because what could be a next option for them isn’t affordable.
Without available affordable rental or sale options, “millennials will pick up and move” to another market, creating a problem for corporations that want to retain talent. Millennials “are much more courageous than their parents in that regard. They will go where they want to live, and then they’ll figure out the job.
One unexpected side effect of the downtown migration is that, with millennials and baby boomers vacuuming up available affordable housing, people who make less than the area median income are left with even fewer options in cities.
With millennials and baby boomers moving back in, the cities have gotten safer and more vibrant, and that’s all great news, but the bad news is our lower-wage workers are not finding housing there as easily anymore.
Disappearing housing stock
In recent local studies, Arlington County and Alexandria determined that more than 85 percent of their areas’ naturally occurring affordable housing stock has disappeared during the past 15 years. Investors have bought up older and distressed properties and remodeled them to appeal to millennials with amenities such as fitness centers and granite countertops.
New developments are always going to be geared toward the highest payers, and the folks that are often the most desirable demographics. And millennials usually tick that box because they can pay higher rents and want to live downtown. The topic of discussion is that people are getting priced out of downtown. Not everybody can afford it.
Affordable housing advocates are relieved that the country’s recently passed tax reform bill retained tax credits for low income housing. However, there is concern that the reduced corporate tax rate, from 35 to 21 percent, could decrease the value of the housing credit for investors.
With a recent study showing that seven affordable housing units are needed for every unit built, it’s an issue that’s not going away. Cities are proactively and aggressively trying to come up with solutions to this problem.
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How to Build Your Credit – Part II

build 2

Now that you have the basics under your belt, we can start moving on to some of the long-term ways you can help build your credit. The first thing you must accept in regards to building credit is that it takes a while – on average, about six months – for your efforts to start to bear noticeable fruit. This is because you can only build your score by practicing good habits. The good news is these habits are what potential lenders see, making them more likely to offer your credit or financing in the future.

  1. Check Your Credit Report – Your credit report changes every month. The easiest and most beneficial thing you can do for your credit health is to monitor your credit report. There are many reputable credit repair sites, and is worth the small fee to keep track of your credit report. If there are any errors or discrepancies, it is always better to fix them right away as opposed to finding out before its too late.
  2. Make EVERY Payment On Time – You will do more damage to your credit score by making late payments than almost any other preventable practice. If your income is outweighed by your monthly output, then it’s time to consider where you can make some significant cuts. Making all of your monthly obligations on time will continually increase your credit score with every passing month. Miss enough monthly payments and your creditors will send you collections or sell your account to a third party – either one spells a huge decrease in your credit score.
  3. Keep a Low Credit Utilization – ‘Credit Utilization’ is a fancy way of saying balance-to-limit ratio. If you have a $1,000 limit on your credit card and you keep a balance of $900 on that card, it is going to hurt your credit health and bring down your credit score. It is better to pay the balance off in full every month. However, if you do need to keep a balance it’s best if you keep no more than 30% of your credit limit.
  4. Keep Accounts Open – Keeping a long credit history goes a long way in helping you establish a good credit score. The only accounts we recommend you closing are any unused cards that also carry an annual fee. The more active credit history you can show on your report, the more likely lenders and other financial institutions are likely to extend you credit or other opportunities.
  5. But Don’t Open too Many – If you don’t have a lot of credit history, you won’t solve this problem by opening several new accounts in a short amount of time. This actually lowers and hurts your score more than helping it. It isn’t how much credit you have, it’s how you’ve utilized and responsibly used the credit you’ve had available.

Good habits are much more difficult to cultivate than bad ones. However, with a little patience and a little work, the good credit health habits you form will provide you with more options than you realize.  If you have any questions, we encourage you to contact us at RezaieCo Advisors +1.202.802.8200

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How to Build Your Credit – Part I


Whether you’re building credit from scratch or trying to clean up a few years of setbacks, building your credit isn’t easy.  If you’re in never-had-credit camp you might have found out how difficult it can be to get an apartment, take out a loan from the bank, or even get a major credit card.  It’s the classic chicken and the egg conundrum – how do you establish credit if no one will give you credit?

To get your credit reporting to the three major bureaus (Equifax, Experian, and Transunion) you will need an account open at least six months and to have the creditors of those accounts to report your information.

There are several other ways to start building your credit we’ll list here:

  1. Authorized User – This takes a level of trust on someone else’s part. Perhaps a parent, other family member, or your husband, wife, or significant other might be willing to add you as an authorized user on one or more of their credit cards.  This isn’t the same as being a co-signer.  As an authorized user, you get to build credit without being legally tied to the debt.
  2. Credit-Builder Loan – Think of this as a reverse savings program. It’s a type of loan designed to do precisely what its name entails – it helps you build credit.  In a typical credit-builder loan, you borrow the money but the financial institution holds the money until the loan is repaid.  They are usually a part of a credit union program. The best part is your payments are reported to the credit bureaus and is a solid way to help you establish your credit history.
  3. Find a Co-Signer – Loans and unsecured credit cards can be obtained if you can find a co-signer with a decent credit score and history.  Unlike being an authorized user, you and co-signer are both responsible for the balance and making on-time payments every month.
  4. Your Rent Can Report – Under normal circumstances your rent doesn’t appear on your credit report.  However, there are rent-reporting companies out there like RentHistoryPros and Rental Kharma that can take your rental history and have it report positively on your credit report.  Your making the payments, you might as well reap some rewards for doing so.
  5. Try to Obtain a Secure Credit Card – When you’re starting out with little to no credit history, this is practically required.  It’s a simple concept: an upfront deposit you make backs the secured credit card.  That deposit is your credit limit (usually). The card is used like any other credit card. You use it to make everyday purchases, make payments before the due date, and are charged interest if you fail to pay off the balance every month.  That cash deposit you made is their collateral if you fail to make your payments. When the account is closed you then get your deposit back. Don’t keep these kinds of accounts indefinitely, a secured credit card is only meant to be used so can qualify for an unsecured credit card with much better benefits.

Like we said at the outset, this isn’t going to be easy to get started.  But the good news is that as long as you follow our advice and make your payments you’ll be on the road to sky high credit scores in no time.  If you have questions, we encourage you to contact us at RezaieCo Advisors +1.202.802.8200

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Regional home-sales prices have now risen 31 months in a row

dcYear-over-year existing-home sales across the Washington inner core were up in April, while the median sales price for the month was the highest this decade, according to new data.

A total of 4,997 properties went to closing across the Washington region last month, an increase of 3.3 percent from a year before and the first time since July 2018 that year-over-year sales were in positive territory.

Over the past 10 years, the average sales total in April has been 4,335. The lowest sales total of the decade for April was recorded in 2011, at 3,525.

Sales data were reported May 13 by MarketStats by ShowingTime based on listing activity from Bright MLS.  Figures represent sales in the District of Columbia; Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church in Virginia; and Montgomery and Prince George’s counties in Maryland.

Sales were higher in every jurisdiction except Montgomery County and the city of Fairfax. Locally, sales were up 1.2 percent to 264 in Arlington; 4.3 percent to 1,596 in Fairfax County; 6.5 percent to 247 in Alexandria; and 20 percent to 24 in Falls Church.

The ongoing increase in median sales prices continues, with the overall median price of $475,000 up 5.6 percent from a year before. April marked the 31st consecutive month of year-over-year increases in median sales price.

Higher prices were fueled, in part, by a 13-percent year-over-year decline in active listings, which left some buyers without much room to maneuver in negotiations – homes that went to closing in April received, on average, 99.3 percent of original listing price, easily the highest April figure of the decade.

The highest median sales price of all jurisdictions was found in Falls Church ($970,000, up from $745,000 a year before), followed by Arlington ($661,500/$556,500), the District of Columbia ($586,900/$590,000), Alexandria ($560,000/$542,950) and Fairfax County ($546,000/$520,000).

The combination of more sales and higher prices pushed the total market volume for April up 5.9 percent to nearly $2.8 billion across the inner core.

Homes that went to closing in February garnered an average 97.7 percent of original listing price, tied with last year for the highest February rate in a decade.

Regionwide, the total available inventory at the end of April was 7,535. All three segments of the market – single-family, townhome and condomonium – showed year-over-year drops in inventory.

With the exception of the District of Columbia, every jurisdiction across the region reported a decline in inventory in April compared to 2018, with the dips ranging from 5.1 percent in Montgomery County to 60.3 percent in Alexandria.

The available inventory for April was less than half the number of homes on the market in April of 2010 and 2011, when the local market was struggling to wriggle out of recession.

In April, 7,976 properties came onto the market, down 5.1 percent from a year before, with townhouse listings down 7.6 percent and condominium listings down 11.1 percent. The single-family segment bucked the trend, with new-listing activity up 0.8 percent for the month.

Among jurisdictions, Falls Church, Montgomery County and the District of Columbia were up in new listings, all other jurisdictions saw declines. Arlington saw the biggest dip in new listings, down nearly 30 percent.

Figures represent most, but not all, homes on the market. All figures are preliminary, and are subject to revision. For information, see the Website at

Any questions, send an email to or call (202) 802-8200.



Opportunity Zone Investment


opportunity-zones-for-investorsThe Tax Cuts and Jobs Act has provided a host of new regulations aimed at spurring economic development. One of those provisions that has flown under the radar throughout 2018 is the newly established qualified opportunity zones (O-Zones). The Department of Treasury recently released the long-awaited proposed regulations that help provide a level of clarity to ease investor uncertainties. The O-Zones are census tracts in low-income communities designated by the governor of each state. Qualified Opportunity Funds (O-Funds) are investment vehicles established to invest in O-Zone assets that offer several tax incentives aimed at providing additional returns to investors and attractive financing opportunities for real estate projects and operating businesses. While somewhat similar in concept to a 1031 exchange there are several variances that open up opportunities where a 1031 like-kind exchange would not be possible.

The O-Zones provide three separate tax benefits to taxpayers:

  1. deferral of gain on the sale of a capital asset
  2. reduction of the future taxable gain if certain holding periods are met
  3. tax-free appreciation in the O-Fund investment if a holding period is met.

The new regulations allow investors to defer the recognition of capital gains occurring before December 31, 2026 if the funds are reinvested in an O-Fund within 180 days of the capital transaction. There are no required exchange intermediaries to hold onto the funds during the 180 days and the funds do not need to be reinvested in similar type property as with a 1031 exchange. The timing deferral of paying the tax is a significant benefit that decreases as we get closer to 2026. The regulations allow taxpayers to defer all forms of capital gain except gains arising from transactions with related persons. An owner of a pass-through entity may elect to defer allocated gains if the entity does not take part in its own O-Zone deferral election. For purposes of the 180 day period for pass-through gains, the beginning date is generally the last day of the entity’s taxable year though a taxpayer may elect to treat the 180 day period as beginning on the date the entity incurred the capital gain.

Investors receive another set of benefits based on the holding period of the subsequent investment in the O-Fund. Those who stay invested in the O-Fund for 5 years will receive a 10 percent step-up in the original deferred gain and if invested for 7 years another 5 percent step-up is earned. Investors who meet these holding periods will see up to 15 percent of the original deferred capital gain forgiven.

An income recognition event occurs at the earlier of the date on which the O-Fund investment is sold or December 31, 2026. At that point, taxpayers will have to pay the tax on the remaining deferred capital gain taking into consideration basis step-ups such that an investor could potentially only have to pay tax on 85 percent of the originally deferred gain in 2026. As we move closer to 2026 the ability for an investor to meet the 5 or 7 year holding periods diminishes such that by 2022 investors will not be able to meet the holding period to receive partial forgiveness. Up front planning is necessary if investors plan on holding onto the O-Fund investment past 2026 to make sure they have funds available to cover the taxable income reported in 2026.

Investors who meet a 10-year holding period receive a final benefit upon disposition of the O-Fund. Investors may elect to step-up the basis in the O-Fund to fair market value on the date the investment is sold as long as the disposition occurs before January 1, 2048, thereby eliminating any taxable income attributable to the post-purchase appreciation in the O-Fund. This allows investors at least 20 years to stay invested in the O-Fund and encourages patient capital investment. The step-up to fair market value provides investors with a significant opportunity to take advantage of depreciation deductions and other basis related reductions.

O-Funds are investment vehicles organized as either a corporation or a partnership, including LLCs, for the purpose of investing in O-Zone property. The IRS has announced that the O-Fund will self-certify by attaching the newly established Form 8996 to the entity’s tax return. The O-Fund must hold at least 90 percent of its assets in O-Zone property or be subject to a monthly noncompliance penalty. The 90 percent threshold is measured as the average of the O-Zone property held on the last day of the first 6-month period and the last day of the taxable year. The regulations provide a safe harbor for businesses that acquire, construct or rehabilitate property such that they can treat cash held with the intent of investing in qualified opportunity zone business property as working capital for up to 31 months if there is a written plan for its use. This safe harbor will prevent businesses from failing to meet the 90% asset test when holding cash for the intended purpose of building or improving property.

O-Zone property is qualified opportunity zone stock, qualified opportunity zone partnership interest or qualified opportunity zone business property. Both qualified opportunity zone stock and partnership interest must be issued after December 31, 2017 in exchange for cash and the entity must meet the definitions of an O-Zone business. An O-Zone business must hold at least 70 percent of its assets in O-Zone business property and cannot hold more than 5 percent of its assets in non-qualified financial property with the aforementioned exception for working capital. It is not necessarily a separate entity be established to serve as a holding company for the O-Zone property though many investment managers are packaging together various qualifying investments to offer as a separate O-Zone Fund. Given the discrepancy of an O-Fund needing to maintain 90 percent of its assets in O-Zone property whereas an O-Zone business must only meet a 70 percent threshold the regulations provide a significant advantage to having the O-Fund serve as a holding company of O-Zone businesses rather than investing directly in O-Zone business property.

O-Zone business property is tangible property used in a trade or business that is acquired by purchase from an unrelated party after December 31, 2017, and the original use of such property in the O-Zone commences with the O-Fund or the O-Fund substantially improves the property. Property is substantially improved if during any 30-month period beginning after the date of acquisition additions to basis exceed the original basis of such property. It is not necessary to factor in the land basis when determining if a substantial improvement has occurred. The land is treated as O-Zone business property if additions to the building basis exceed the building’s original basis.

In the case of an investment in an O-Fund where only a portion of the investment consists of a deferred capital gain, the investment shall be treated as two separate investments. Only the portion related to the deferred capital gain is eligible for the O-Zone tax benefits. Thus, investors who do not have a capital gain to defer are not eligible for any of the O-Zone tax benefits.

The mechanics of establishing and maintaining an O-Fund are complex and the Department of Treasury plans to release additional guidance to help investors. Contact #RezaieCo with any questions you have about forming or investing in an O-Fund.

Virginia did a good job of picking strategic areas to designate as opportunity zones. Localities recommended census tracts to the state, which then nominated the tracts for official designation at the federal level. To be eligible, census tracts had to have a poverty rate of 20% or a median family income that is 80% of statewide median income based on U.S. Census data. That meant that 901 of Virginia’s census tracts were eligible to become opportunity zones. States were only allowed to nominate up to 25% of their eligible zones.  In nominating its zones, Virginia balanced evaluating census tracts with the most need and those with the most likelihood of future investment.  Virginia’s opportunity zones are in places that are either already developing or are on the cusp of development.

The Northern Virginia multifamily housing area is a particularly interesting area because of the mismatch between demand and supply in workforce housing.  The multifamily housing has been the darling of the institutional investment community for 20 years and should have compelling returns for opportunity-zone investors looking to protect their realized capital gains.

To find out if an area of your interest is located in of one of Virginia’s hundreds of Qualified Opportunity Zones, click on the map image below and you will be taken to an interactive map.


Any questions on this article, contact us at or call (202) 802-8200/ (703) 629-0994.

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Opportunity Zones – The biggest economic development program in the country.


Opportunity Zones mark the latest way of helping investors save on taxes, while also aiding to advance the economic fabric of an underdeveloped community. These incentives were developed by the recently-passed Republican Tax Cuts and Jobs Act of 2017, which allows private investors to save on taxes by injecting cash into certain opportunity funds.

The bill is slated to help out communities all around the Washington, D.C. area, which include underprivileged regions in Virginia and Maryland. Here’s what you should know about Opportunity Zones.

How Opportunity Zones Are Chosen
Every area of the country that is part of the low-to-moderate-income (LMI) census tracts was eligible to be designated as an Opportunity Zone. A geographic region has the LMI designation if the median family income is under 80% of the median income of the surrounding area. Plus, if the area has a poverty rate of over 20%, there’s a good chance that it will become an Opportunity Zone.

A number of census tracts located adjacent to LMI tracts were also considered for designation, regardless of income status. Ultimately, deciding whether or not an area is an Opportunity Zone is a burden that would fall on the governor of each state, albeit with some limitations. Governors had the freedom to choose up to 25% of eligible LMI or high-poverty areas as Opportunity Zones.

Up to 5% of designated tracts could fall in the middle- or upper-income if they were adjacent to LMI tracts. The tracts were reviewed by the National Community Reinvestment Coalition (NCRC), which helped to finalize the list of opportunity zones around the nation.

What an Opportunity Zone Designation Means for the Area
Garnering an Opportunity Zone designation can be big for a certain census tract as unrealized capital gains, which are used to fund these investments, is valued at roughly $6.1 trillion. Such an investment can help to completely reshape communities as long as local groups, investors and city officials join forces to determine the best initiatives to invest in.

Some positives that could arise from these investments include the expansion of start-ups that may create jobs and stimulate local economies. Job training facilities in the area could also help citizens with limited education develop an actionable skill that they can use to make a living and improve their economic situation.

Opportunity Zone could reportedly bring in up to $2.2 trillion in investments, although this means nothing unless the money is invested wisely. As things stand, the program still has many flaws that could lead to a slew of issues such as displacement, so ensuring the money is going to the right channels is as important as the money itself.

How Taxpayers Will Benefit if They Invest in Opportunity Zones
Taxpayers have plenty of reason to invest in Opportunity Zones, which is an opportunity that is offered to those who reinvest gain from a sale of property into a “Qualified Opportunity Fund.” One such benefit is that reinvesting this gain in a Fund results in the gain being deferred until the earlier of the date when the taxpayer sells their interest in the Fund or December 31, 2026.

The investment also states that if a taxpayer invests in the Fund for at least five years, 10% of the original gain is excluded. If they do so for at least seven years, an additional 5% (amounting to a total of 15%) of the original gain is excluded. Plus, if a taxpayer invests in a Fund for 10 years or more, all appreciation in that investment will be tax-free once they exit the Fund.

How the DC Area Is Set to Benefit from Opportunity Zones
A total of 149 areas in Maryland have been identified as Opportunity Zones, consisting largely of east and west Baltimore, as well as Park Heights and large parts of south Baltimore such as Port Covington. Fort Meade, Aberdeen Proving Ground and the Indian Head naval facility in southern Maryland are also set to benefit from the designation.

Some of the initiatives that could help these areas include a slew of new mixed-use offices that Under Armour CEO Kevin Plank wants to bring to Port Covington. Plus, the state has identified an area in Montgomery County as the potential spot for Amazon’s second headquarters as state officials are seeking to expand the construction of distribution centers in the area. The Shaw neighborhood in DC is another candidate for the Amazon headquarters.

Michael White, chief of staff at the Maryland Department of Housing and Community Development, is hoping to reel in investors by choosing areas that already have other programs. Local officials, developers, and politicians discussed how bringing more offices and jobs in enterprise zones could offer businesses tax benefits, which is a win-win for everyone.

In Virginia, the benefit could also be huge in areas such as Charlottesville and Albemarle County where new housing and jobs could help low-income workers spend less time and money traveling. Areas in Albemarle have expressed their enthusiasm over how the northern tract could improve in the coming years as there are plenty of transportation improvements and amenities that have been released in the last few years, with many more to come.

All in all, the DC area has a lot to win from these investments, but not everyone is in favor of Opportunity Zones, which could cause a negative impact in some regions.

The Downside of an Opportunity Zone Designation
There is some concern regarding how investing in housing and commercial real estate locations in an LMI area could adversely affect its current residents. Some zones do not actually invest in their current residents as they instead focus on improving the neighborhood, leading to potential gentrification and the displacement of existing residents.

The DC area needs to be more careful about how it invests this money as the tax subsidy could result in increased property values, higher rents, and improved business profitability. Higher-income professionals could replace the local residents as a result of higher returns to investors causing larger tax subsidies, which leads to a rapid gentrification process.

The Urban Institute Analysis discovered in a study that a full third of the tracts nominated as part of DC’s Opportunity Zones are at high risk of increased socioeconomic change, including housing unaffordability and displacement due to these incentives. Potential neighborhoods affected include Brightwood, Pleasant Plains, Deanwood and Carver Langston.

Some cities are requesting to be excluded from the program due to displacement fears. Areas that are designated as Opportunity Zones and experience increased investment should be committed to developing housing below 60 and 30 percent of the area median income to keep rent low.

Existing businesses should be aided in order to help existing residents obtain gainful employment. The fact that Opportunity Zones are profit-driven, there is no incentive to actually help existing communities with programs such as Community Land Trusts, designed to help keep current housing affordable in the long-term by lowering speculative housing costs.

Ultimately, there should be enforceable regulations in place for Opportunity Zones that help to determine how the money benefits these communities, as well as proactive programmatic work that aids current residents.

The District of Columbia has nominated 25 Opportunity Zones as vehicles to leverage and encourage targeted investment in the city.


Opportunity Zones (OZ) are low-income census tracts that allow individuals and businesses to pool money for development while deferring taxes on gains from sales of assets within those tracts. Out of 97 qualifying low-income census tracts, the Office of the Deputy Mayor for Planning and Economic Development was able to nominate 25 to the Treasury Department and has selected the following:

  • Census tract 2101, the area of Brightwood Park between Georgia and Missouri Avenues to the west and north, with 5th and Gallatin Streets NW to the east and south.
  • Census tract 3400, which is roughly between Georgia Avenue and First Street, from Irving Street to Florida Avenue NW. The zone includes both Howard University and the address of the McMillan Sand Filtration Site, although it does not encompass the land McMillan sits on.
  • Census tract 6400, which essentially encompasses the Buzzard Point neighborhood from South Capitol Street to Delaware and 5th Avenues SW beneath M Street. This area is home to the soon-to-open Audi Field soccer stadium.
  • Census tract 6804, which runs under Benning Road to the west of Oklahoma Avenue, 22nd Streets NE, and 19th Street SE. The tract is bound by the Anacostia River (but includes RFK Stadium and parts of Kingman and Heritage Islands).
  • Census tract 7304, which encompasses the portion of Congress Heights southeast of Alabama Avenue and Wheeler Road SE and just west of Stanton Road SE. This area borders southern Prince George’s County and contains the vast majority of Oxon Run Park and Parkway, as well as United Medical Center.
  • Census tract 7401, which includes the Poplar Point and Barry Farm neighborhoods from the Anacostia River to South Capitol Street SE, east of the St. Elizabeth’s campus and bound by Suitland Parkway. While Barry Farm is being razed and redeveloped, the tract is also skirting the future landing of the 11th Street Bridge Park.
  • Census tract 7407, containing the Fort Stanton neighborhood north of Suitland Parkway, west of Stanton Road, south of the intersection of Martin Luther King, Jr. Avenue and Morris Road SE.
  • Census tract 7503, which is the historic Anacostia district bound by the Anacostia Freeway, Good Hope Road, and Morris, 16th and Bangor Streets SE. The neighborhood includes the Frederick Douglass Home and a raft of redevelopment that will include the first Busboys and Poets east of the River.
  • Census tract 7601, which includes the portion of Fairlawn between the 11th Street Bridge Park/Good Hope Road and Minnesota and Pennsylvania Avenues SE, north of S Street.
  • Census tract 7603, southeast of the Alabama Avenue and Naylor Road intersection and south of Pennsylvania Avenue SE. The tract includes Naylor Gardens, Hillcrest and Fairfax Village.
  • Census tract 7604, northeast of the Alabama Avenue and Naylor Road intersection, south of Pennsylvania Avenue, including the neighborhoods of Good Hope and Randle Highlands.
  • Census tract 7709, the Ward 7 area north of Pennsylvania Avenue and just east of the River, cutting off just above the DC Therapeutic Recreation Center and including parts of the Twining and Dupont Park neighborhoods.
  • Census tract 7803, the Central Northeast area that runs north of Benning Road, east of Kenilworth Avenue, west of 47th Street and south of Nannie Helen Burroughs Avenue NE.
  • Census tract 7804, the Lincoln Heights/Deanwood area straddling Nannie Helen Burroughs Avenue between 44th and Division Avenues from Hayes Street to East Capitol Street NE, and including the future Deanwood Town Center and redeveloped Strand Theater.
  • Census tract 7806, the Deanwood area south of Kenilworth and Eastern Avenues and north of Sheriff Road NE.
  • Census tract 7808, which stretches from the Northeast Boundary north of East Capitol Street, south of Eads Street and east of Division Avenue NE, including part of Marvin Gaye Park and much of the Watts Branch tributary of the Anacostia.
  • Census tract 8904, which includes the triangular neighborhood of Carver-Langston east of the Starburst intersection (and potential redevelopment site) and bound by Benning Road, Maryland Avenue and 26th Street NE.
  • Census tract 9102, including the Brentwood neighborhood between New York and Rhode Island Avenues, 18th Street NE and the train tracks that separate it from neighboring Eckington.
  • Census tract 9204, the area of Edgewood bound between New York Avenue and Franklin Street with 4th Street and the aforementioned train tracks.
  • Census tract 9601, the Kenilworth and Eastland Gardens neighborhoods just east of the River and north of the Watts Branch, between Kenilworth and Eastern Avenues NE.
  • Census tract 9602, the Mayfair neighborhood just east of the River and south of the Watts Branch, between Kenilworth Avenue and Benning Road NE.
  • Census tract 9603, the Benning area east of 295, north of East Capitol Street and south of Benning Road in Northeast.
  • Census tract 10300, which primarily is sited between Piney Branch Road and Alaska Avenue NW, between Butternut Street and Fern Place NW, including the old Walter Reed Campus (and site of a massive ongoing redevelopment). The tract also includes the area of Takoma between Georgia and Eastern Avenues and Fern Place NW.
  • Census tract 10400, which includes the St. Elizabeth’s campus (and site of the under-construction Monumental Sports and Entertainment Complex and larger mixed-use development). The tract also includes the portion of Congress Heights from the intersection of South Capitol Street and Martin Luther King, Jr. Avenue SE northward, bound by Alabama Avenue and the Hebrew Congregational Cemetery.
  • Census tract 10900 of Bellevue, at the southernmost tip of the city bordered by both Prince George’s County and Alexandria, west of South Capitol Street and south of Galveston Street SW.

The selected zones were intended to focus on areas east of the Anacostia River, retail-heavy corridors and creative, industrial and manufacturing zones, but most also share the distinction of having a strong development pipeline.

To Recap, the “Three Major Benefits Available To Opportunity Zone Investors”

Investing in an Opportunity Zone yields three types of attractive benefits: 1) capital gains tax deferment, 2) capital gains tax reduction, or “trimming,” and 3) capital gains tax elimination. The level of benefit investors can take advantage of depends upon several distinct factors.

Profits from the sale of an existing investment will accrue tax. But using those profits, or capital gains, to reinvest in a qualified  Opportunity Zone gives investors a deferment on paying those capital gains taxes, either until that new interest is sold or until the year 2026, whichever comes first.

What’s even better is that investors could see those capital gains tax payments reduced, or trimmed, by 10% or even 15%.

1. How to Reduce Capital Gains Tax Payments By 15%

To get a 15% reduction in paying capital gains tax from the sale of old property, an investor must use profits from that sale to reinvest in an OZ within 180 days of that sale. Further, they must finalize that new, OZ transaction before the end of 2019 and hold onto that investment through 2026. This fulfills the new tax code’s seven-year requirement.

2. How to Reduce Capital Gains Tax Payments By 10%

To get a 10% reduction in paying capital gains tax on the sale of old property, an investor must use profits from that sale to reinvest in an OZ by 2021, and they must hold onto that investment for a full five years, or until 2026.

3. How to Get Capital Gains Tax Eliminated (for the new investment only)

In order to see a complete elimination of capital gains tax payments, investors can purchase a new investment in a qualified Opportunity Zone (using their previous capital gains) but they must hold that interest for ten years or longer. The capital gains tax is eliminated on the future sale of the investment made with an investor’s initial capital gains investments. In other words, one would still have to pay deferred and potentially trimmed capital gains tax on their old investment in 2026, but when that Opportunity Zone investment is sold, if it were held for ten years or longer, no capital gains tax would be due. #RezaieReport #RezaieRE #RezaieCo


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How the Government Shutdown Is Affecting Mortgage Lending


With the partial federal government shutdown now approaching its third week, several federal agencies have suspended all but essential operations. Federal banking regulators—the Consumer Financial Protection Bureau, FDIC, Federal Reserve, and OCC—remain open, as their funding does not come from congressional appropriations. But many federal lending programs and other functions that relate to mortgage origination and servicing have been curtailed or otherwise affected.

This article provides a summary of key mortgage-related programs affected by the shutdown.


The Department of Housing and Urban Development is closed. In accord with the HUD Contingency Plan, the Federal Housing Authority’s Office of Single Family Housing will endorse new single-family loans, but not HECM (reverse mortgages) or Title I (property improvement) loans. FHA is operating with reduced staffing, which may result in closing delays.

Ginnie Mae has reduced staffing to essential personnel levels during the shutdown. Ginnie Mae will continue to make pass-through principal and interest payments to investors and perform other essential functions, such as granting commitment authority and supporting the issuance of guaranteed mortgage backed securities. Ginnie Mae will notify issuers and other stakeholders to provide specific instructions and contact information.

The Department of Agriculture will not issue new loans or guarantees through its Rural Housing Financing program. Scheduled closings of single housing direct loans are being cancelled. Lenders that proceed with scheduled closings of single-family guaranteed loans where the guarantee was not issued before the shutdown do so at their own risk.

The Department of Veterans Affairs is fully funded for fiscal year 2019 and all VA operations will continue unimpeded during the shutdown. The processing of VA loans is considered an essential function, and VA loans are being funded and closed.

On Dec. 28, 2018, the Federal Emergency Management Agency announced that the agency would resume operations of the National Flood Insurance Program during the shutdown, retroactive to Dec. 21. Earlier in the week, FEMA had announced that it would suspend the sale and renewal of NFIP policies, despite Congress’ passage and the President’s signature of a bill to reauthorize the NFIP before the shutdown began. ABA, along with members of Congress and other trade groups, strongly objected to FEMA’s earlier decision, citing concerns that the move could complicate and potentially delay mortgage loan closings where NFIP coverage is required. ABA applauded FEMA’s subsequent decision to reinstate the program.

Social Security payments are non-discretionary spending and will continue to be made during the shutdown. More broadly, the SSA contingency plan excepts a majority of SSA employees from furlough and provides for continuation of most functions, and SSA offices remain open. The shutdown may affect mortgage lenders who need to validate Social Security numbers with the SSA using SSA-89, however. The contingency plan does not specify whether processing SSA-89 requests would be continued or discontinued during a shutdown, and it is currently unclear whether these requests are being processed.

The Internal Revenue Service is now processing requests for tax transcripts made through its Income Verification Express Service (IVES) program. IVES is used by mortgage lenders to verify income as part of loan originations. The IRS had suspended the service when the partial shutdown began. After strong advocacy with the Treasury by ABA and other trade groups, the IRS resumed the service on January 7, 2019, noting in its announcement that transcript requests may take longer to process until the backlog clears. On the same day, the IRS also announced that it will recall a significant portion of its furloughed workforce in order to process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.

Fannie Mae and Freddie Mac are not government-funded and are operating as usual. In most cases, the shutdown will not impede the GSEs’ processing of conventional purchase loans and refinances, and both Fannie and Freddie had adopted workarounds to address certain indirect impacts of the shutdown, such as the temporary unavailability of IRS tax transcripts or SSN validation. Fannie Mae and Freddie Mac have each issued temporary guidance to sellers and servicers to assist impacted borrowers, addressing such loan origination issues as employment and earnings verification, IRS transcript requests, social security number validation and flood insurance.


The shutdown affects nearly 800,000 government employees, with approximately 420,000 working without pay and 380,000 furloughed. Federal contractors also face loss of income on contracts.

In their temporary guidance, both Fannie Mae and Freddie Mac advised mortgage servicers that they can offer forbearance options to mortgage borrowers impacted by the shutdown, in accordance with the respective company’s existing forbearance policies.

On Jan. 8, the FHA issued a mortgagee letter encouraging servicers and lenders to extend special forbearance plans, waive late fees and suspend credit reporting on furloughed federal workers and contractors suffering a loss of income due to the shutdown.  FHA Commissioner Brian Montgomery reminded servicers are reminded “of their ongoing obligation” to offer forbearance, citing the FHA handbook.

Also on Jan. 8, Treasury Secretary Steven Mnuchin issued a statement commending the efforts of mortgage lenders, mortgage servicers, and other financial institutions working to assist those who may face financial hardships resulting from the federal government shutdown. “We applaud the actions of mortgage lenders, mortgage servicers, and other financial institutions, including Fannie Mae and Freddie Mac, that are taking steps to assist individuals experiencing temporary financial difficulties due to the government shutdown,” – Mnuchin

During the 2013 shutdown, the CFPB, Federal Reserve, FDIC, OCC and NCUA issued a joint statement encouraging financial institutions to work with affected customers. Noting that “prudent workout arrangements that are consistent with safe-and-sound lending practices are generally in the long-term best interest of the financial institution, the borrower, and the economy,” the agencies said that arrangements that “increased the potential for creditworthy borrowers to meet their obligations” while dealing with the transitory effects of a shutdown “should not be subject to examiner criticism.” The 2013 shutdown lasted 16 days. There were no subsequent government shutdowns until 2018, with a three-day shutdown in January, a one-day shutdown in February, and the most recent shutdown commencing on Dec. 21. The banking agencies have not issued any new statements in response to these latest shutdowns, but the 2013 statement remains available on each agency’s website. #RezaieReport #RezaieRE #RezaieCo


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How will the New Tax Law affect retirees?

The changes in the Tax Cuts and Jobs Act signed into law late in 2017 will be reflected in 2018 tax returns, which are filed this spring. The law is one of the most sweeping tax code reforms of the last three decades, and it is likely to affect all Americans who file tax returns. Many of its provisions are certain to affect retirees. Here’s a look at four of the most significant.

1. The standard deduction is nearly doubling.

Deductions are amounts subtracted from income, lowering the taxable income and thus reducing the total amount owed in tax.

Taxpayers must choose between two categories: the standard deduction and itemized deductions. If filers choose the standard deduction, they exclude a set amount from their income. If they choose to itemize, they subtract the dollar value of each deductible category.

The new tax law almost doubles the standard deduction, from $6,350 to $12,000 for single fliers, and from $12,700 to $24,000 for married people filing jointly.

On the face of it, the considerable hike in the standard deduction sounds significant. It may not be as far-reaching as it initially seems, though. In years past, filers using the standard deduction could include a personal exemption as well, as long as no one claimed them as a dependent. For 2017, for instance, single filers using the then standard deduction of $6,500 could also subtract $4,150 from their income for a personal exemption, making the total adjustment $10,650.

But the personal exemption was eliminated under the Tax Cuts and Jobs Act, so folks taking the standard deduction for 2018 won’t have access to also taking a personal exemption any longer.

The jump in the 2018 standard deduction thus represents more of a muted increase from the former standard deduction plus personal exemption level, rather than effectively doubling the past standard deduction. The gain is more than 12% for a single filer, for instance. That’s still a nice increase, and it more than makes up for the elimination of the personal exemption. But it’s just not as much as an initial comparison of amounts might lead you to believe.

The increase in the standard deduction has the resulting effect of making itemization necessary for fewer people, including retirees. In the past, itemizing as many deductions as possible was the smartest move, as long as the total exceeded the amount of the standard deduction plus the personal exemption. Common deductions included mortgage interest up to $1 million, a level that the Tax Cuts and Jobs Act has now reduced to $750,000.

The rise in the standard deduction might mean that retirees can achieve roughly the same overall deductible by taking the standard amount as they could by itemizing. Once you get an idea of what your itemized deductibles add up to, you can decide whether itemizing still makes sense. If not, taking the standard deduction can save time, effort, and tax-preparation expenses.

2. The deduction for state and local taxes has been capped.

There’s also a brand new cap on another widely used deduction: state and local taxes, including property tax (SALT). In the past, the total could be deducted, period. Your SALT total made no difference to its deductible status. But for 2018 and beyond, SALT deductions are restricted to a total of $10,000.

For retired filers whose SALT is less than $10,000, there is essentially no change stemming from the SALT cap, although they should consider the advisability of choosing itemization or the standard deduction.

But for many retirees, especially in high-tax states like California, New York, and New Jersey, the SALT cap could have significant repercussions, for three reasons.

First, if your SALT total is considerably more than $10,000, you are losing one of the financial incentives to own a house. You will no longer be able to deduct all your SALT, which may make owning a property less appealing.

Second, the SALT cap may make downsizing more desirable for homeowners in high-tax jurisdictions. Property taxes, for example, usually depend upon real estate size: A 700-square-foot condo is likely to be assessed considerably less in taxes than a 15,000-square-foot house. Retirees with high property taxes may end up taking a hard look at their property footprint.

Third, it may become less appealing to live in a state with high taxes. Many states have no state income taxes, after all, including Alaska, Florida, Nevada, South Dakota, Texas, and Washington. States also vary widely in the amount of property tax and sales tax assessed. Localities vary in the respective taxes levied. In the wake of the cap, all these levels may receive increased scrutiny as a factor in real estate desirability.

Many retirees think about moving to eliminate the maintenance costs for a large property or to live near grown children (or both), but then they don’t actually make the move. The SALT cap could be an impetus to make that thought a reality, especially if the state of your dreams has more-favorable taxes.

3. Taxpayers may be able to deduct more for healthcare expenses.

For the last several years, filers could itemize and deduct healthcare expenses totaling more than 10% of adjusted gross income (AGI). Under the new tax law, healthcare costs are now deductible if they exceed 7.5% of your AGI. This increased deduction potential was made retroactive to 2017 taxes as well.

AGI is calculated by totaling all income for the year (wages, bonuses, dividends, and so forth) and subtracting allowed adjustments, such as qualified retirement account contributions and alimony. AGI, which can be found on the Internal Revenue Service’s 1040 form, is the amount from which deductions, whether they’re standard or itemized, are subtracted. Because many deductions depend on percentages or totals of the AGI, the amount is a significant one for tax purposes.

If your AGI was $65,000 in 2016, for example, you would have needed healthcare expenses of more than 10%, or $6,500, to utilize the healthcare deduction. If your AGI was $65,000 in 2018, though, you can itemize the deduction if they exceed 7.5%, or $4,875.

The increased potential to deduct is likely to affect retirees, who have high healthcare expenses. A couple needs an estimated $399,000 saved by age 65 to meet healthcare costs in retirement, according to the nonprofit Employee Benefit Research Institute, roughly $19,950 out of pocket per year over 20 years.

Note that health savings account (HSAs) can make any healthcare cost bite more palatable, by providing participants with a tax deduction in the year of contribution and tax-free withdrawals. HSA maximum contributions for 2018 are $3,450 for an individual (up $50 over the prior year) and $6,850 for a family (up $100). (For 2019, the maximum climbed again, to $3,500 for individuals and $7,000 for a family.) Contributors who are 55 or older are still allowed a $1,000 additional catch-up contribution.

4. Tax rates lowered in most brackets.

Tax rates were lowered almost across the board under the new tax law. As a result, many retirees will pay less in taxes.

While there are seven tax brackets for 2018, just as there were in 2017, the rates and income associated with most brackets have changed. Although the lowest tax bracket remains the same —-10% for those who make up to $19,050 — taxes for most others are falling.

Single filers who made between $19,050 and $77,400 during 2017 were in the 15% tax bracket for example. For 2018, people with incomes in the same range are in the 12% tax bracket. Single filers who made between $77,400 and $156,150 in 2017 were in the 25% tax bracket. For 2018, they will pay 22% in tax on income in the same range. It’s likely that some aspect of the new tax law affects you — maybe even to a great extent if you’re a retiree. Reviewing these four categories will help you plan your tax return for maximum benefit.

The $16,146 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,146 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after.

Any questions, contact us at (202) 802-8200 or email to

#RezaieCo #RezaieRE #RezaieReport #ChristiesInternationalRealEstate #LongandFoster

Long and Foster Real Estate, Inc.

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Office (703) 573-2600

International buyers showing less interest in U.S. real estate

A combination of inventory shortages and rising prices means that international buyers are showing less interest in U.S. property than they have in the last few years.

The National Association of Realtors says international sales in the U.S. hit $121 billion during the period from April 2017 to March 2018. The data comes from the NAR’s 2018 Profile of International Transactions in U.S. Residential Real Estate.  This amounted to a 10 percent decrease compared to the same period one year before.

After a surge in 2017, the United States saw a decrease in foreign activity in the housing market in the latest year, bringing us closer to the levels seen in 2016.  Inventory shortages continue to drive up prices, and sustained job creation and historically low interest rates mean that foreign buyers are now competing with domestic residents for the same, limited supply of homes.

The NAR says foreign buyers usually purchase more expensive homes than the average U.S. buyer. The median price for foreigner-bought homes was $292,400 during the period, compared to the $249,300 median for all U.S. homes. Chinese buyers are the biggest spenders on U.S. property, with their average purchase price clocking in at $439,100.


Just five countries account for almost half of all foreign real estate buyers in the U.S. – China, Canada, India, Mexico and the U.K., which comprised 49 percent of the dollar volume of such purchases. China is the largest single investor amount foreigner countries, spending $30.4 billion on U.S. real estate during the period, but that was four percent less than one year before.

The highest amount of foreign buying activity in the U.S. continues to be centered on three states: Florida (19 percent); California (14 percent); and Texas (9 percent).

International buyers say they buy U.S. property for numerous reasons, but the most frequent reason, at 52 percent, is for a primary residence, according to the report. However, Chinese buyers were most likely to purchase a home in the U.S. for student housing, while Canadian buyers were the most likely to purchase a property as a vacation home. Indian buyers were the most likely to purchase a U.S. property to serve as their primary residence.

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5 Factors That Determine if You’ll Be Approved for a Mortgage


If you want to buy a home, chances are good you’ll need a mortgage. Mortgages can come from banks, credit unions, or other financial institutions — but any lender is going to want to make sure you meet some basic qualifying criteria before they give you a bunch of money to buy a house.

There’s variation in specific requirements from one lender to another, and also variation based on the type of mortgage you get. For example, the Veterans’ Administration and the Federal Housing Administration (FHA) guarantee loans for eligible borrowers, which means the government insures the loan so a lender won’t face financial loss and is more willing to lend to risky borrowers.

In general, however, you’ll typically have to meet certain criteria for any lender before you can get approved for a loan. Here are some of the key factors that determine whether a lender will give you a mortgage.

1. Your credit score

Your credit score is determined based on your past payment history and borrowing behavior. When you apply for a mortgage, checking your credit score is one of the first things most lenders do. The higher your score , the more likely it is you’ll be approved for a mortgage and the better your interest rate will be.

With government-backed loans, such as an FHA or VA loan, credit score requirements are much more relaxed. For example, it’s possible to get an FHA loan with a score as low as 500 and with a VA loan, there’s no minimum credit score requirement at all.

For a conventional mortgage, however, you’ll usually need a credit score of at least 620 — although you’d pay a higher interest rate if your score is below the mid 700s.

Buying a home with a low credit score means you’ll pay more for your mortgage the entire time you have the loan. Try to raise your score as much as you can by paying down debt, making payments on time, and avoiding applying for new credit in the time leading up to getting your loan.

2. Your debt-to-income ratio

Your debt-to-income (DTI) ratio is the amount of debt you have relative to income — including your mortgage payments. If your housing costs, car loan, and student loan payments added up to $1,500 a month total and you had a $5,000 monthly income, your debt-to-income ratio would be $1,500/$5,000 or 30%.

To qualify for a conventional mortgage, your debt-to-income ratio is usually capped at around 43% maximum, although there are some exceptions. Smaller lenders may be more lax in allowing you to borrow a little bit more, while other lenders have stricter rules and cap your DTI ratio at 36%.

Unlike with credit scores, FHA and VA guidelines for DTI are pretty similar to the requirements for a conventional loan. For a VA loan the preferred maximum debt-to-income ratio is 41% while the FHA typically allows you to go up to 43%. However, it’s sometimes possible to qualify even with a higher DTI. The VA, for example, will still lend to you but when your ratio exceeds 41%, you have to provide more proof of your ability to pay.

If you owe too much, you’ll have to either buy a cheaper home with a smaller mortgage or work on getting your debt paid off before you try to borrow for a house.

3. Your down payment

Lenders typically want you to put money down on a home so you have some equity in the house. This protects the lender because the lender wants to recoup all the funds they’ve loaned you if you don’t pay. If you borrow 100% of what the home is worth and you default on the loan, the lender may not get their money back in full due to fees for selling the home and the potential for falling home prices.

Ideally, you’ll put down 20% of the cost of your home when you buy a house and will borrow 80%. However, many people put down far less. Most conventional lenders require a minimum 5% down payment but some permit you to put as little as 3% down if you’re a highly-qualified borrower.

FHA loans are available with a down payment as low as 3.5% if your credit score is at least 580, and VA loans don’t require any down payment at all unless the property is worth less than the price you’re paying for it.

If you put less than 20% down on a home with a conventional mortgage, you’ll have to pay private mortgage insurance (PMI). This typically costs around .5% to 1% of the loaned amount each year. You’d have to pay PMI until you owe less than 80% of what the home is worth.

With an FHA loan, you have to pay an upfront cost and monthly payments for mortgage insurance either for 11 years or the life of the loan, depending how much you initially borrowed. And a VA loan doesn’t require mortgage insurance even with no down payment, but you typically must pay an upfront funding fee.

4. Your work history

All lenders, whether for a conventional mortgage, VA loan, or FHA loan, require you to provide proof of employment.

Typically, lenders want to see that you’ve worked for at least two years and have steady income from an employer. If you don’t have an employer, you’ll need to provide proof of income from another source, such as disability benefits.

5. The value and condition of the home

Finally, lenders want to make sure the home you’re buying is in good condition and is worth what you’re paying for it. Typically, a home inspection and home appraisal are both required to ensure the lender isn’t giving you money to enter into a bad real estate deal.

If the home inspection reveals major problems, the issues may need to be fixed before the loan can close. And, the appraised value of the home determines how much the lender will allow you to borrow.

If you want to pay $150,000 for a house that appraises only for $100,000, the lender won’t lend to you based on the full amount. They’ll lend you a percentage of the $100,000 appraised value — and you’d need to come up with not only the down payment but also the extra $50,000 you agreed to pay.

If a home appraises for less than you’ve offered for it, you’ll usually want to negotiate the price down or walk away from the transaction as there’s no reason to overpay for real estate. Your purchase agreement should have a clause in it specifying that you can walk away from the transaction without penalty if you can’t secure financing.

Shop around among different lenders

While these factors are considered by all mortgage lenders, different lenders do have different rules for who exactly can qualify for financing.

Be sure to explore all of your options for different kinds of loans and to shop around mortgage lenders so you can find a loan you can qualify for at the best rate possible given your financial situation.

Any questions, contact us at (202) 802-8200 or

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